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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 692.76

+0.5%

Jan 26 4:00 PM EST

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To: JRI who wrote (66233)	1/8/2001 3:36:26 PM
From: Doug	Read Replies (1) of 99985

JRI: Currently most indices are not that bad ;2-3% growth. The bad ones are retail and Consumer confidence . The health of the market is a good measure of the later. AG knows he has just 3 interest rate cuts at his disposal to steer for a soft landing. He has already used one and it has had little effect on consumer confidence. The market is demanding more cuts. This is the message I get. They wont get it on demand. So the market either has to stabilize on its own between now and end Jan or else further erode Consumer confidence by declining.( good possibility) A.G would like to see Consumer confidence being restored without his help. That way he still has his 2 cards to play with the maximum of flexibility. If he uses his cards now and the market tanks to a new low in April, Consumer Confidence will be shattered and the Country will go into a recession. Then it will be impossible to do much without trigering a round of inflation. The last two interest rate cuts have to be very carefully timed. To make that happen, the rate cut has to be effective after the market reaches its absolute bottom. After that the market is up and away spiked by 2 rate cuts. To suggest (Dan Hays) that we will see a Bear market after a rally does not make sense. That suggestion defeats the purpose of A.G's current intervention and makes the FED helpless. I certainly agree that the Houses are not worried about A.G's timing. However, I am sure that A.G is concerned about the timing of the Houses that control stock prices and Consumer Confidence. He will now act only after the Market has had their final say. Perhaps you see things differently. If so do let us know the picture you see. Thanks.

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